Rajeev Karwal was president and chief-executive officer at Reliance Digital when in 2007, he decided to start Gurgaon-based Milagrow Business and Knowledge Solutions (Milagow – Spanish for the magic of faith) – a venture aimed to help micro, small and medium enterprises (MSMEs) to overcome the various challenges they face. “Some of these organisations do not even know how to interview a candidate,” explains Karwal. Thus, Milagrow was formed with six service offerings for MSMEs – CEO mentoring, startup consulting, scaling up, business process reengineering, turnaround, and build, operate and transfer (BOT), depending on the level of maturity of a client.

“Many large organisations and the small divisions of large organisations also suffer from similar problems.”

The idea revolves around being a catalyst for growth for these ventures and so, is typically a one to three year engagement, handholding client companies with a focus on devising its strategy, helping in implementation and providing enabling services as needed.

Across the board

Milagrow has a special focus on retail, information technology and electronics sectors, areas which are highly dynamic and changing all the time. But this focus also showed Karwal that the traditional definition of MSME – based on the amount of investment, the number of employees or annual turnover – was misleading. “Many large organisations and the small divisions of large organisations also suffer from similar problems,” he explains. So, Milagrow decided to widen its focus to serve startups, mid-size companies and even large companies, whose smaller divisions needed support.

Its client list includes names such as Happily Unmarried, Chhabra 55, Electrospark, Havells, Sonalika Tractors, Amar Raja, SR Group’s AMW Trucks and Surya Lighting; and international firms such as Turkey-based Arcelite, Iran-based Snow and Pakistan-based Dawlance. For Surya Lighting, Milagrow helped it increase its capacity from two lakh CFLs (compact fluorescent lamp) to 2.5 million through BOT model, where about 12 of Milagrow’s people worked hands-on with the company. For AMW Trucks, it was a case of business process reengineering, to make it the third largest heavy vehicles manufacturing company in India, by putting back the focus on its sales and distribution. At Dawlance, the Milagrow team worked closely with the company for three years to increase its market share.

Recently, the company has been appointed by Eurostar in Dubai to enable it to grow from a million dollar to a billion dollar venture and diversify into Africa. “We are very keen to work only with companies that seek growth,” stresses Karwal. According to him, many companies are willing to pay consultants today, but unless there is a specific goal, it is a wasted effort. Additionally, its CEO mentoring arm specifically ensures the top management at a client’s firm is committed to its goals, without which the entire effort can be fruitless.

In the initial days, Milagrow did several mentoring events in association with TiE (The Indus Entrepreneurs) and other such organisations as a means to promote the concept and subsequently referrals have earned it the prestigious clientele it boasts of today.

Diversification

Karwal’s vision is to make Milagrow be known as a company that invests in right technologies and help its clients where it matters, irrespective of how value is delivered.

In line with this philosophy, Milagrow has also entered the product development space and introduced the TabPC – a hybrid laptop and tablet computer. Priced at Rs. 39,900, it is targeted at professionals from various disciplines including designers, doctors, and education practitioners and comes with software preloaded for these professionals. In the pipeline are cheaper 16 GB and 8 GB versions (the current TabPC is 32 GB). While TabPC was launched this October, the product took 18 months to design and manufacture. Milagrow’s human technology business unit that developed this product was formally launched earlier this year.

The plan next is to develop robots to serve people, the first one a domestic robot for household chores. These products will be distributed through retail channels, the company has signed up leading retailers like Vivek’s in the south and Vijay Sales in the north, among others, to make its products available across India. The products will also available online through portals like Flipkart and Yeti.

Operations management

Milagrow works with internal teams, consultants and partners, which contribute to its fixed costs. In its consulting division, there are over 100 direct and indirect consultants, the latter being hired on a per-project basis. They are domain experts trained by Milagrow on various management and related practices to ensure that clients can be served even in cities where Milagrow doesn’t have a direct presence.

The technology division has 18 people and partners with other research and development companies for product design, sales and distribution. On a candid note, Karwal also rues that there are a few problems at the middle management level within the company, with high levels of job hopping and poaching. “Middle managers draw salaries higher than they should, are insecure, and tend to play up to their bosses rather than play on the front foot. There is a crisis brewing there,” he says.

Apart from people-related challenges, Karwal also finds that sticking to ethical practices presents its own stumbling blocks as many companies focus more on growing quickly and not on the means to reach that goal. He has started two non-governmental organisations – one, a forum for ethical business and hopes to have 1,000 companies signed up in the next two years. The other one, MSME Forum, is a like a doctor for MSMEs. CEOs can write to the forum and meet mentors who will suggest solutions, free of cost.

Future plans

Milagrow is a 100 percent co-owned company between Rajeev and Shobha Karwal, with Dr. Jagdish Sheth as the chief mentor and Prof. Anil Gupta as the value ombudsman. Seth and Gupta provide valuable advice and bring in an external perspective as needed. The company is completely debt free and the product division was launched with funding from internal accruals. Currently, the company is not looking to raise money from outside and is self-sufficient.

On the products front, Karwal believes that over 5 Lakh TabPCs can be sold by the end of this year and it is targeting 15 million units in sales by 2015, and over a 10 percent market share by then. As the product division scales up, the consulting division seems to be on autopilot with sustained growth. As Karwal signs off, he mentions that the name Milagrow is constantly misinterpreted as ‘meet and grow’. Ironically, that seems to fit the company’s own growth story.

Concept in brief

•   The idea – To offer advisory services to micro, small and medium enterprises and help its clients grow by hand-holding them during the transition phase

•   The solution – Several MSMEs grapple with solving basic business problems, which can be fixed through hands-on consulting. Karwal believes that his various services – CEO mentoring, startup consulting, scaling up, business process reengineering, turnaround, and build, operate and transfer (BOT) model – can make a huge difference to MSMEs and the Indian economy eventually.

•   Interesting aspect of its strategy – In addition to the afore-mentioned services, Milagrow organises two business forums – a forum for ethical businesses and The MSME Forum, to help build a community around MSMEs and make the process of seeking advice and brainstorming ideas a lot easier.